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In the spotlight

Held on 10 November 2016 in the midst of encouraging EU signals and developments on defence, EDA’s Annual Conference entitled 'A third industrial evolution or revolution in defence?' offered a timely and useful platform for the whole European defence spectrum - governments, armed forces, industry, EU institutions, think tanks and media - to discuss the future of European defence matters.

The conference opened with a first highlight: Federica Mogherini, the High Representative of the Union for Foreign Affairs and Security Policy and Vice-President of the European Commission who is also the Head of the EDA, emphasized the EU’s “new level of ambition on defence” reflected in the Global Strategy, and called for action to implement it.

Time has come, she said, to make urgent and concrete steps towards a stronger and more efficient European defence, adding: “Next March (2017) will be an important moment when we will celebrate the 60th anniversary of the Treaty of Rome. And by that date, a concrete implementation process will have to be up and running. The title of this conference asks whether we are living a revolution or an evolution of European defence. Let me tell you very clearly: I believe the revolution we need is simply – it is not so simple sometimes - to make things work. Sometimes it is more difficult to make things work than to reflect on big scenarios and great revolutions. So we will not engage in another theoretical debate: what we are doing, what we are working on, is concrete deliverables. What we need, what our citizens need is not an endless hypothetical debate, be it on EU army or on changing our treaties, what we need to do it is to use the instruments, all the potential, all the tools we already have. If I could summarise the message it would be ‘no excuses, we just need to do it and to do it now’”.

Mrs Mogherini recalled the three parallel processes currently ongoing, namely the implementation of the EU Global Strategy, the Commission’s European Defence Action Plan (EDAP) and the follow-up on the EU/NATO Joint Declaration. These three processes have to be complementary, she insisted. We have to advance quickly to make sure that those processes lead to first concrete results by spring 2017. In this respect, the EDA can act as a pivot between the Commission and Member States on European defence, she said.

Towards a Defence and Security Union

The High Representative and Vice-President of the Commission put a special emphasis on the need to make sure Europe has the required capabilities to play its role in defence.

“For our cooperation to be sustainable, we need to make sure our capabilities are up to the task – and here I come to the ‘noyau dur’. Europe has to be very careful, I believe, very careful, and I do not need to preach to the converted, that the investment gap is not translated into an ever wider technology gap. Because a technology gap would then lead to an interoperability gap. And if left unchecked, this could translate into a political gap which would clearly not be in our interest. And I would add, this would also have economic implications for our continent”.

Mrs Mogherini concluded with an upbeat message: “By March, I believe we could announce, in Rome hopefully, a major step forward towards a Defence and Security Union (…) This is a unique moment for us to make the difference and succeed where sixty years ago, our founding mothers and fathers did not (…) This is the time, I believe, to take our responsibilities and to respond to that call, together, and we can do this only as a true Union”.

What we need, what our citizens need is not an endless hypothetical debate, be it on EU army or on changing our treaties. What we need to do it is to use the instruments, all the potential, all the tools we already have

EDAP to support whole sequence of defence capabilities development

Elżbieta Bieńkowska, the Commissioner for Internal Market, Industry, Entrepreneurship and SMEs, shared Mrs Mogherini’s assessment about the strong momentum for EU defence cooperation. “Co-operation is the only way forward. There is a clear political momentum to move towards more integration in defence, and we should seize it”, she said.

With its European Defence Action Plan (EDAP), which was adopted on 30 November (see previous articles in this magazine), the Commission wants to make a substantial contribution to it. “Our objective is clear: to provide support for the whole sequence of defence capabilities development. The Commission will act as an enabler and accelerator for European defence cooperation, proposing ambitious but necessary elements. Our starting point is to ensure that there is a strong industrial base and to identify where the EU can provide added-value. This, in turn, will enable support for the development of strategic capabilities identified in the follow up to the Global Strategy”, Mrs Bieńkowska told the conference in her ‘outlook speech’.

Speaking more specifically about the Commission’s upcoming Preparatory Action on defence research, she stressed that “the cooperation with EDA will be key for its success”. It will be the first time that EU budget is used to finance defence in research which is a “real breakthrough”, she added. “I trust we will work together to make this test a success. We cannot fail. This Preparatory Action will pave the way for a future programme dedicated to defence research”.

The EDAP is also meant to unlock EU investment to defence supply chains, especially for small and medium-sized enterprises “which are an important element to ensure the competitiveness of defence supply chains”, Mrs Bieńkowska stated. “We want therefore to ensure that there are financial tools for defence-related SMEs to help them modernise their industrial capacities, grow, and scale up across borders”.

On the current EDA-Commission cooperation, she said: “I value the work we do together. The Preparatory Action will be a revealing moment of our common capacity to work together. EDA has a clear role in defining capability priorities for Member States. And we need very much your expertise into that, in full complementarity with NATO processes. It is also clear that for the first time since we discuss defence cooperation, the Commission is ready to play its role to the full and to even consider putting EU funds, especially for research in defence. This is potentially a game changer”.

THE EUROPEAN DEFENCE AGENCY’S ANNUAL CONFERENCE HAS BECOME A WELL-ESTABLISHED ANNUAL RENDEZ-VOUS FOR THE EUROPEAN DEFENCE COMMUNITY

Common solutions needed

Adressing the conference on behalf of the (then acting) EU Presidency, Róbert Ondrejcsák, the Slovak State Secretary of the Ministry of Defence, called for “common solutions” on European defence. “Consensus is well reached on the main principles of the level of ambition (…) but when it comes to details, the unanimity is far more difficult, or impossible to reach. Despite the common goal, we still diversify in visions and plans concerning defence cooperation, financing CSDP missions and operations, EU Battle Groups and form of support of our partner countries. Slovakia is not an exception, of course. But it is important that at the end of the day we find common solutions, agreeable to every Member State”, he said.

R&T, Pooling & Sharing

Lacking research and development (R&D) funds for defence is one of the risks Europe faces because “this would mean that Europe and its Member States will no longer be able to afford sophisticated modern military capabilities” that are required to protect itself, Mr Ondrejcsák said. “This creates a risk for the European defence industry which will face an increasing competition from companies producing military equipment in the third countries”. He also urged Member States to engage in Pooling & Sharing which can achieve “significant savings” and enable Member States to acquire together military capabilities that they could otherwise not afford individually.

And now… the future!

With his vibrant and inspiring ‘breakthrough speech’ on innovation and research as part of a wider vision for a future European defence, Stephan De Spiegeleire, Principal Scientist at the Hague Centre for Strategic Studies, immediately captured the audience’s imagination by anticipating and analysing the broader technological context in which defence is likely to evolve in the future.

This creates a risk for the European defence industry which will face an increasing competition from companies producing military equipment in the third countries

Vice Admiral Mark Mellett, Chief of Defence, Ireland

Róbert Ondrejcsák, State Secretary of the Ministry of Defence of the Slovak Republic, EU Presidency

Two panel debates on the opportunities and challenges from the supply and demand sides respectively, both skillfully moderated by Graham Muir (Head of EDA's Strategy & Policy Unit), stood out as the most interactive part of this year’s conference as the audience made plenty
use of the opportunity to comment and ask questions to the panelists.

High-level panelists in the first roundtable (supply side) were Lowri Evans (Director General DG Internal Market, Industry, Entrepreneurship and SME's at the European Commission), Heikki Allonen (former CEO and President of Patria Oyj, the Finnish national defence induystry group), Dr. Kurt Braatz (Senior Vice President at Krauss-Maffei Wegman), Pedro Sinogas (CEO of Tekever) as well as Prof. Witold Holubowicz (CEO of research/consulting company Itti Ltd.). The panel raised and discussed a number of crucial questions related to the future of the European defence industry, such as 'Are Europe's defence industrial models suited for the future?', 'How best to bring innovation closer to defence?', 'Is enough being done to capitalise on civil and military synergies?' and 'What measures can the European Commission bring to
support innovation in defence?'.

A particular emphasis was put on how the role of SMEs and Start-Ups in the defence supply chain could best be maximised and how their full potential as a source of innovation and a key enabler for competitiveness can be realized. In this respect, the need was stressed to promote
SME's access to defence research pogrammes and to encourage their greater involvement in EU funding programmes.

The second panel debate (demand side) saw high-profile representatives from national governments and EU institutions sharing their views on implications for the defence sector at large: whole-of-government policies in support of strategic innovation, emerging risks and
vulnerabilities in terms of technology control, interface with industry, impact on acquisition choices and life-cycle management.

The four high-level panelists were: Ioan Mircea Paşcu (Vice-President of the European Parliament and former Defence minister of Romania), Rear Admiral Matteo Bisceglia (Director for Naval Armaments, Italy), Vice Admiral Mark Mellett (Chief of Defence, Ireland) and Alexander
Weis (Vice-Director of the Bundeswehr Planning Office, Germany, and former Chief Executive of the EDA).

Among the questions discussed were the following: 'Are the current procurement processes of Defence Ministries best adapted to the challenges and opportunities presented by innovation?', 'How important is continued and sustained national investment in research & innovation?', 'What do policy-makers need to do to provide the best possible environment to foster the technological innovations required?',
'How can Europe respond to the US Third Offset Strategy?' and 'How to overcome fragmentation of demand?'.

There was broad consensus on the EDA's role in defence R&T and innovation: the Agency should continue to act as a "catalyst" by identifying innovation gaps and potential collaborative opportunities, bringing interested Member States together and facilitating collaborative R&T projects. However, it was stressed, R&T initiatives need to be driven by capability requirements. The objective is not to fund industrial
policy, said Mr Weis. "The EDA has to make sure that R&T projects are capability driven, be it national or EU capabilities"

A particular emphasis was put on how the role of SMEs and Start-Ups in the defence supply chain could best be maximised

FOCUSED ON DEFENCE INNOVATION AND TECHNOLOGICAL TRENDS AFFECTING DEFENCE, THE CONFERENCE ALLOWED FOR LIVELY AND FRUITFUL DISCUSSIONS BASED ON OUTSTANDING SPEECHES AND CONTRIBUTIONS

Jorge Domecq: Conference takeaways

In his closing words, EDA Chief Executive Jorge Domecq summarized the conference presentations and discussions and singled out a number of takeaways, in particular:

innovation in defence research, planning and funding is paramount. Safeguarding leadership in strategic technologies is therefore more pressing than ever

developing new technologies will require a “new mind-set” in order to: - identify and incorporate commercial sector innovations and quickly develop new concepts of operation; - tap into innovation in the private sector and channel it into defence; - achieve cross-border competition which is so important to SME's and start-ups in Member States which do not have prime defence companies

a balance is needed between not suffocating SME's/start-ups and taping their knowledge for defence, on the one hand, and providing governments with assurances that these new players will respect the specificities of the defence and security world, on the other hand

major challenges arising from a third industrial revolution are to integrate future innovations into development and production cycles, gain awareness of emerging leap-ahead technologies, access non-traditional sources of innovation, and ensure the reliability of trusted supply chains

innovation does not come for free: the massive decline in budgetary terms of our defence R&T efforts is a matter of the highest concern because capabilities of the future are at stake here and the competitiveness of our defence industry is at risk. Therefore, fresh funding and the reinforcement of our R&T and innovation efforts will be key to structure European cooperation

Member States should make systematic use of the financial and policy instruments offered by the EU which can support defence research, identify key enabling technologies and support testing and experimentation in view of potential uptake in defence products

the EDA is looking to get ahead by also working “up-stream”, notably by facilitating Member States’ convergence on identifying and prioritising research topics

European collaboration generates innovation and remains the best guarantee for achieving value for money and developing cutting-edge defence capabilities. It remains the most efficient and cost effective way to ensure Europe’s strategic autonomy nevertheless, cooperation in defence is still not part of Europe’s DNA

EDA will continue to engage with industry and R&T innovators as valuable partners in providing technology and solutions which address the needs of Member States.

EDA : "At the service of Member States"

The Chief Executive closed the Annual Conference 2016 by recalling EDA's mantra: “At the service of its Member States". They should view the agency as a “crucial and natural partner” and better use its resources and expertise, he stressed.

Jorge Domecq concluded the event by making an appointment with the audience: “See you again next year for the 2017 Annual Conference!”.

Co-operation is the only way forward. There is a clear political momentum to move towards more integration in defence, and we should seize it